Plantation Holdings (FZ) LLC (Appellant/Claimant) v Dubai Islamic Bank PJSC
| Jurisdiction | England & Wales |
| Judge | Lady Justice Gloster |
| Judgment Date | 15 October 2013 |
| Neutral Citation | [2013] EWCA Civ 1229 |
| Docket Number | Case No:A3/2013/2690 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 October 2013 |
[2013] EWCA Civ 1229
Lord Justice Moore-Bick
Lady Justice Gloster
and
Lord Justice Ryder
Case No:A3/2013/2690
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
Mr Justice Flaux
2010 Folio 1157; 2013 Folio 1058
Royal Courts of Justice
Strand, London, WC2A 2LL
Stuart Cakebread and Juliette Levy (instructed by Miramar Legal) for the Appellant
Robert Anderson QC and William Edwards (instructed by Hogan Lovells International LLP) for the Respondent
Introduction
This is the judgment of the court. It sets out the reasons why, on Friday, 27 September 2013, we gave the appellant, Plantation Holdings (FZ) LLC ("Plantation"), the claimant in action 2013 Folio 1058 ("the second action"), permission to appeal against an order of Flaux J dated 13 September 2013, but dismissed Plantation's appeal.
By his order, Flaux J dismissed Plantation's application by notice dated 7 August 2013 for:
i) an order under CPR, rule 6.15(1) permitting it to serve its claim form in the second action on the defendant, Dubai Islamic Bank PJSC ("the Bank") by an alternative method, on the Bank's solicitors, Hogan Lovells International LLP ("Lovells"), in London; and
ii) an order under CPR rule 3.1(2)(g) and (h) directing that Plantation's claim in the second action be either tried, or consolidated, with the Bank's existing action 2010 Folio 1157 ("the first action") against five defendants (not including Plantation) ("the Defendants"), the trial of which is due to start on 7 October 2013, and is listed for 12 days, i.e. three Commercial Court weeks).
Although Plantation's notice of application was only issued in the second action, Flaux J's order was made in both the first and the second actions. Paragraph 1 of Flaux J's order dismissed what was referred to as "the application for Joinder" and directed that, in the event that Plantation were to issue an application for permission to serve the claim form in the second action on the Bank out of the jurisdiction under CPR rule 6.36, such application should be reserved to Flaux J.
By notice of appeal dated 17 September 2013 Plantation appealed against:
i) what it described as Flaux J's refusal of its application "for consolidation/hearing together/joinder of" the first action with the second action; and
ii) Flaux J's refusal to order alternative service of the claim form in the first action on the Bank in London.
Plantation's Grounds of Appeal, served on the same date, additionally claimed that:
"4. [Flaux J] also wrongly refused to give a direction that any findings in [the first action] should not bind [Plantation] in [the second action], and in so doing failed to have any or any proper regard for the fact that [Plantation's] right under Article 6 to a fair trial was compromised.
5. The judge also wrongly decided that:
a. [Plantation] required permission to serve out of the jurisdiction on [the Bank] when it in fact sought alternative service within the jurisdiction."
Because of the urgency of this matter, given the fact that the trial of the first action is due to start on 7 October 2013, with a time estimate of three weeks, we effectively heard the appeal itself on the application for permission. For that reason we gave permission to appeal. In ordinary circumstances, it is unlikely that we should have done so.
Mr Stuart Cakebread and Miss Juliette Levy appeared on behalf of Plantation; Mr Robert Anderson QC and Mr William Edwards appeared on behalf of the Bank. Mr Anderson made it clear, as he had done below, that: (a) the Bank's solicitors and counsel are instructed to appear only in the first action, in which the Bank is claimant, and not in the second action, in which the Bank is defendant, and which has not yet been served on the Bank; and (b) that nothing said or done at the hearing amounted to a submission to the jurisdiction by the Bank in the second action.
Mr Max Mallin, counsel representing the first and second defendants in the first action, appeared at the start of the hearing to inform the court of the following matters:
i) that the first and second defendants maintained their position of opposing Plantation's application and were content to adopt the position taken on the appeal by the Bank; and
ii) that there had been a delay on the part of the first and second defendants in complying with an order of Popplewell J dated 26 July 2013 for service of expert reports by 6 September 2013, but, as was agreed with the Bank's legal representatives, the consequences of that delay would not lead to any adjournment of the start of the trial of the first action.
In those circumstances, the court released Mr Mallin from any further attendance at the hearing.
Background to the two actions
The Bank is a public joint stock bank incorporated in and under the laws of the Emirate of Dubai ("Dubai") and is 30% state-owned.
Plantation is also incorporated in and under the laws of Dubai. It was incorporated to carry through a project, known as the Plantation development, which was to build on land in Dubai a world-class polo and equestrian centre, adjacent to a very substantial luxury villa development. Plantation was assigned a lease of the land by its sole beneficial owner and manager, a Mr Arthur Fitzwilliam ("Mr Fitzwilliam"), who in turn had acquired a lease from the freehold owners ("the Plantation lease").
In the first action the Bank makes various claims against the Defendants (only three of which are actively defending the proceedings). They are the following:
i) The first defendant is PSI Energy and Holding Co BSC ("PSI"). It is alleged to be a company owned (indirectly) and controlled by the second defendant, Mr Ryan Cornelius ("Mr Cornelius"). It is defending the Bank's claim, as is Mr Cornelius, through the same solicitors and counsel.
ii) The second defendant is Mr Cornelius. He is currently in prison in Dubai, having been convicted of offences of fraud relating to the Bank's claims in the first action.
iii) The third defendant is Charles Ridley ("Mr Ridley"). He is also currently in prison in Dubai in relation to similar offences. He is also defending the first action, with the assistance of a former solicitor, Mr David Mills.
iv) The fourth defendant is Eren Nil ("Mr Nil"). Mr Nil is not actively contesting the proceedings.
v) The fifth defendant is CCH (Europe) GmbH ("CCH Europe"). It has played no part in the proceedings, and judgment in default has been entered against it. It was a subsidiary of an English company, CCH International plc ("CCH International").
In the period 2002–2007, the Bank entered into agreements, described as agency agreements, with CCH Europe and CCH International. Under those agreements, the CCH companies were to enter into trade finance agreements with third parties as the Bank's agent. Over that period, the CCH companies presented documents to the Bank ostensibly showing genuine trade finance agreements, and the Bank advanced approximately US $500 million to the CCH companies. Those funds, or so the Bank thought, were being applied for the purposes of legitimate trade financing.
In fact, only about US$150 million was applied to genuine trade finance business, and the rest was, or so the Bank alleges, diverted into Mr Cornelius's companies. By mid-2007, the amount outstanding (other than in respect of genuine trade finance) was about US$330 million. In circumstances that are not relevant to the present application, the fraud ("the receivables fraud") came to light. A compromise was agreed, and an agreement called the Restructuring Agreement ("the RSA") was entered into in August 2007. The agreement is governed by English law (save in so far as inconsistent with the principles of Shari'a law) and is subject to an exclusive English jurisdiction clause.
Under the terms of the RSA, CCH Europe agreed to repay about US $501 million in accordance with a repayment schedule. Messrs Cornelius, Ridley and Nil guaranteed this repayment obligation, as well as agreeing to disclose their assets and provide security over, and transfer to, the Bank all proceeds derived from the advances. Mr Cornelius and Mr Ridley were business associates of Mr Fitzwilliam in relation to the Plantation development. It appears that Mr Cornelius may have used proceeds of the receivables fraud to invest in Plantation, albeit that Plantation's case is that the fact that the investment derived from the proceeds of fraud was unknown to Mr Fitzwilliam.
Plantation also provided security for the obligations owed to the Bank by the Defendants under the RSA. This included a guarantee by Plantation, which in turn was secured by an agreement called a Conditional Assignment of Lease ("the Conditional Assignment") in relation to the Plantation lease. Plantation and the head lessor consented to the Conditional Assignment. The Conditional Assignment, unlike the RSA, was subject to Dubai law and jurisdiction. In return, the Bank agreed to waive and compromise any and all claims it had against the Defendants.
In 2007, CCH Europe repaid around US $10 million and another party to the RSA repaid a further US $50 million. No other payments were made.
In May 2008 Mr Cornelius and Mr Ridley were arrested by the Dubai authorities in connection...
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